The Government of Malaysia signed a non-binding multilateral Memorandum of Understanding (MOU) today, 24 October 2014, on the establishment the Asian Infrastructure Investment Bank (AIIB). YB Minister of Finance II, Dato’ Seri Ahmad Husni Hanadzlah signed on behalf of Malaysia. The MOU was signed by 20 others proposed founding member countries, including China, Singapore, Thailand and the Philippines. The signing was held in Beijing, today.
AIIB is a proposed multilateral development bank (MDB) to be created to provide funding for infrastructure development. The AIIB will focus more on financing physical infrastructure projects for economic growth as compared to other MDB on eradicating poverty. As such, it is intends to complement and supplement the other existing MDBs such as the Asian Development Bank and the World Bank as well as other financial initiatives, for example the ASEAN Infrastructure Fund, by co-financing big scale infrastructure projects. This is due to the fact that considerable assistance is required for infrastructure development especially to low and lower-middle income countries. The proposed initial authorized capital for AIIB is USD50 billion of which 20% will be the paid up capital. AIIB will utilize commercial funding from financial markets to raise the necessary resources to provide competitive loans to the member countries. The resources will be allocated based on three key criteria; regional development impact, assisting the poor and no fixed system based on share allocation.
The AIIB targets to accelerate the infrastructure development in the following sectors; energy and power, transportation, telecommunication, rural infrastructure and agricultural development, urban development, logistics and other productive sector as deemed appropriate. This will facilitate higher economic growth which will give significant impact to the well being of especially low income countries.
Dato’ Seri Ahmad Husni Hanadzlah attended the 21st APEC FINANCE MINISTERS’ MEETING (APEC FMM) in Beijing, People’s Republic of China from 21-22 October 2014